Abacus: Small Enough to Jail, the new documentary from Steve James (Hoop Dreams), is another underdog story, though in this case, the underdog takes the unlikely form of a New York bank that trafficked in dubious mortgages.
The title is a riff on the phrase “too big to fail,” a term applied to giant New York banks that cynically packaged crap mortgages into crappy bonds fraudulently sold as AAA-rated investments. The federal government decided to fine big banks rather than prosecute, collecting $100 billion (actually from shareholders) while executives kept their jobs and bonuses.
Manhattan District Attorney Cyrus Vance made a curious exception, though, for Abacus Federal Savings Bank, a small institution owned and run by Chinese Americans, created to serve Chinatown (the bank had six branches, including one in Philadelphia), where immigrants and owners of cash businesses had a hard time getting credit.
In 2009, with the damage done by the meltdown at its peak, Abacus found that some of its loan officers were falsifying loan documents and soliciting bribes from clients in the process. The bank’s executives fired the employees involved and immediately reported the matter to its federal regulator. Years later, to their consternation, these same executives saw the bank itself indicted on fraud charges by Manhattan D.A. Vance, who had been conducting a five-year grand-jury probe.
These charges laid the blame for the scam on the bank and its officers, all members of the Sung family, who granted James access during the two-month trial and who became the emotional subject of the filmmaker’s narrative.
Vance, simply put, picked on the wrong family. Abacus founder Thomas Sung is a classic American success story – an immigrant who worked hard, succeeded (as a lawyer), founded the bank to serve his underserved community, inspired by George Bailey of It’s a Wonderful Life, a hero he strove to emulate.
Sung also raised four ferociously intelligent daughters, who rally to his side. They are formidable — all have law degrees (bank president Jill Sung also has a Wharton M.B.A.); three are Abacus officers who directed the purge of rogue employees. One, incredibly, was a crusading attorney in the DA’s office, and promptly quit to assist with her father’s defense.
In the trial’s opening statement, a prosecutor describes the scheme as “a conspiracy fueled by greed” and “designed to deceive” the federally chartered mortgage buyers who bought the loans. During the trial, it becomes evident that the bank’s default rate was astonishingly low and that even the loans with bad paperwork sold to Fannie Mae performed remarkably well.
The prosecutor isn’t describing Abacus – she’s describing the unprosecuted big banks just up the street: Citigroup, Morgan Stanley, and Goldman Sachs, banks that paid tens of billions in fines for selling bad loans to investors and fueling a crisis that cost the economy trillions of dollars and millions of jobs.
Goldman, by the way, separately paid $500 million to settle charges related to a single mortgage-backed investment misrepresented to investors, but again was not prosecuted. The name of that investment: Abacus.
Abacus: Small Enough to Jail
Documentary directed by Steve James. Distributed by PBS Distribution.
Running time: 1 hour, 28 minutes.
Parent's guide: Not rated (adult themes).
Playing at: Ritz Bourse.